How climate finance ‘flows’ around the world is an informative article from CarbonBrief. Excerpts below in italics followed by a comment from Bjorn Lomborg.
Climate finance is one of the bedrocks of negotiations at the United Nations Framework Convention on Climate Change (UNFCCC), including the “COP24” talks taking place this month in Katowice, Poland.
“Climate finance” refers to money – both from public and private sources – which is used to help reduce emissions and increase resilience against the negative impacts of climate change.
Rich countries have promised they will provide $100bn a year in climate finance to poorer nations by 2020. The UNFCCC’s recent biennial assessment found this sum had reached $75bn in 2016, a step forward compared to the $65bn given in 2015.
The OECD, a Paris-based intergovernmental economic organisation, asks its 36 member countries to report on their foreign aid, including climate finance. The data captures climate finance that is both bilateral (country to country) and multilateral (via international institutions) It also gives detailed information about funded projects. (The OECD calls this database “climate-related development finance” rather than strictly climate finance).
- Donor governments gave climate finance totalling $34bn in 2015 and $37bn in 2016, according to OECD estimates (note that this is not a full estimate of money counting towards the $100bn pledge – see below for more).
- Japan was the largest donor, giving $10.3bn per year (bn/yr) on average over the two years. It was followed, in order, by Germany, France, the UK and the US.
- India was the largest recipient on average, receiving $2.6bn/yr. It was followed, in order, by Bangladesh, Vietnam, the Philippines and Thailand
- The single largest “country-to-country” flow was an average yearly $1.6bn from Japan to India.
- The US was the top contributor to the multilateral Green Climate Fund (GCF) in 2016. (However, the US has now ended its support for the GCF).
- Around $16bn/yr went to mitigation-only projects, compared to $9bn for adaptation-only projects.
Around 42% of the finance consisted of “debt instruments”, such as loans.
It is important to note that the OECD database does not claim to capture all climate finance counting towards the $100bn. The totals of the data given here add up to $37bn, well below the $47bn the OECD recently estimated in a separate, top-down overview of public climate finance from developed to developing countries in 2016. The OECD also put public climate finance at $55bn in 2017. However, no project-level database for 2017 has been released yet.
The values represent money committed by governments or agencies on the basis of a firm written obligation and backed by available funds. Therefore, it does not represent pledges.
As the first chart above shows, not all climate finance goes straight from one country to another. Instead, a sizeable wedge goes via international institutions, such as multilateral climate funds and multilateral development banks (MDBs). The breakdown of the $5.1bn climate share of contributions to these bodies is shown in the second diagram above.
It shows, for example, that the Green Climate Fund (GCF), which was established with a mandate specifically to leverage climate finance towards the $100bn pledge, received an average $1.7bn per year in 2015 and 2016. Japan, the UK and the US contributed the most.
The Paris Agreement says that scaled-up financial resources “should aim to achieve a balance between adaptation and mitigation”. As is shown in the OECD data (and elsewhere) this is not close to being the case, with almost double the amount going to mitigation-only projects compared to adaptation-only ones.
Discussions on climate finance are currently ongoing at this year’s climate conference in Katowice, Poland, as part of the Paris “rulebook”. Sticking points include accounting rules and the extent to which developed countries should promise concrete sums of climate finance years ahead of time. Some countries are also pushing for talks to start on a new climate finance goal, due to begin in 2025.
One further complication is that all of the above numbers assess only public finance from developed to developing countries. This does not account for all of the money going towards tackling climate change, such as private finance, in-country spending or flows from one developing nation to another, such as support being offered by China. This is often referred to as “South-South” finance.
The UNFCCC biennial report gives an estimate that includes all of these flows and puts overall global climate finance at $680bn in 2015 and $681bn in 2016, a 17% increase on 2013-2014 levels. The growth was largely driven by high levels of new private investment in renewable energy, the report says.
Climate Money Could Be Better Spent
We must also bear in mind that global warming is not the planet’s only challenge. We often hear that it is the defining issue of our time, but it is no such thing. By the 2070s, the IPCC — the U.N. climate change panel — estimates that warming will cost between 0.2 and 2 percent of global GDP. This is certainly a problem, but not the end of world.
Speaking of climate change in catastrophic terms easily makes us ignore bigger problems, including malnutrition, tuberculosis, malaria and corruption. The World Health Organization estimates that climate change since the 1970s causes about 140,000 additional deaths each year, and toward the middle of the century will kill 250,000 people annually, mostly in poor countries. This pales in comparison with much deadlier environmental problems such as indoor air pollution, claiming 4.3 million lives annually, outdoor air pollution killing 3.7 million and lack of water and sanitation killing 760,000. Outside of environment, the problems are even bigger: Poverty arguably kills 18 million each year.
Every dollar spent on climate change could instead help save many more people from these more tractable problems. The current approach to subsidize solar and wind arguably saves one life across the century for every $4 million spent — the same expenditure on vaccinations could save 4,000 lives. Each person — and the next president — needs to decide his or her legacy.
Postscript: Financing for Climate Aid is a Fraction of the Full Cost of Climate Crisis Inc.
A fuller accounting of the climate crisis industry is more like 2,000,000,000,000 US$ per year (2 Trillion)
See Climate Crisis Inc. Update